The IPOX® Week, September 30, 2019

  • IPOX Indexes record sharp losses into quarter-end as investors take profits after big YTD gains; Growth firms’ multiples contract as economic, political uncertainty weighs ahead of earnings.
  • IPO Deal-flow Review & Outlook: High-profile IPOs trade mixed around the world as Sweden’s EQT (EQT SS) debuts strongly, while global growth deals falter. Amid the WeWork-fallout and the sharp turn in U.S. IPO sentiment towards Q4, more firms are lined up to go public

IPOX Indexes record sharp losses into quarter-end as investors take profits after big YTD gains; Growth firms’ multiples contract as economic, political uncertainty weighs ahead of earnings, WeWork fall-out. The IPOX Indexes displayed renewed weakness into quarter-end, as investors continued to take profits in many high-growth satellite positions ahead of earnings, amid more economic & political uncertainty and heightened U.S./China trade tensions reflected in a jump in risk (VIX: +12.40%) and drop in global yields. The continued unease about the poor performance of recent U.S. IPOs amid the We-Work fall-out & huge pre-IPO valuation cut continued to sour sentiment ahead of earnings season. In the U.S., e.g., the IPOX 100 U.S. (ETF: FPX) dropped -3.06% to +21.21% YTD, following the weakness in U.S. small-caps (RUT: -2.52%) to sharply lag the S&P 500 (SPX) on the week. Declines extended across the IPOX Portfolios focusing on exposure domiciled outside the U.S., including the IPOX International (ETF: FPXI) and IPOX Europe (ETF: FPXE). Relatively unseasoned companies led the list

IPOX® 100 U.S. Investing with the “FPX” ETF since 2006:

of sharpest decliners in the U.S, including software security unicorn CrowdStrike (CRWD US: -20.17%), Softbank-held biotech Guardant Health (GH US: -15.34%) and specialty chemicals maker Avantor (AVTR US: -9.75%). Amid the China/U.S. tensions, we note the fresh post-IPO High in 09/2018 IPO Chinese shopping platform operator IPOX International (ETF: FPXI) heavyweight H.K.-listed bellwether Meituan Dianping (3690 HK: +4.52%).

IPOX-linked ETF Performance Update: The IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities Fund (ETF: FPX) closed at +21.84% YTD, while the IPOX International (IPXI)-linked First Trust International Equity Opportunities Fund (ETF: FPXI) and the IPOX 100 Europe (IPOE)-linked First Trust IPOX® Europe Equity Opportunities Fund (ETF: FPXE) closed at +20.71% and +20.72% YTD, respectively.

Select IPOX® Indexes Price Returns (%) Last Week 2018 2019 YTD
IPOX® Indexes: Global/International
IPOX® Global (IPGL50) (USD) -3.04 -11.37 18.05
IPOX® International (IPXI)* (USD) -2.49 -13.47 18.57
IPOX® Indexes: United States
IPOX® Composite U.S. (IPXC)* -3.53 -7.59 14.33
IPOX® 100 U.S. (IPXO)* -3.06 -8.80 21.21
IPOX® Indexes: Europe/Nordic
IPOX® 30 Europe (IXTE) (EUR) -1.28 -13.46 21.52
IPOX® Nordic (IPND) -1.14 -15.45 21.59
IPOX® 100 Europe (IPOE)* (USD) -1.99 -16.60 17.49
IPOX® Indexes: Asia-Pacific/China
IPOX® Asia-Pacific (IPTA) (USD) -2.37 -3.21 0.34
IPOX® China (CNI) (USD) -3.09 -22.83 13.14
IPOX® Japan (IPJP)** (JPY) 0.04 -13.70 -0.36

* Basis for ETFs: FPX US, FPX LN, FPXE US, FPXU FP, FPXI US, TCIP110 IT and CME-traded e-mini IPOX® 100 U.S. Futures (IPOU9). ** Live since 07/18. Please contact [email protected] for other IPOX® Indexes.

IPO Deal-flow Review & Outlook: High-profile IPOs trade mixed around the world as Sweden’s EQT (EQT SS) debuts strongly, while global growth deals falter. Amid the WeWork-fallout and the sharp turn in U.S. IPO sentiment towards Q4, more firms are lined up to go public. Eights firms debuted in markets open to global investors last week, with the average (median) equally-weighted stock declining by -3.38% (-8.76%) based on the difference between the final offering price and Friday’s close. Swedish buyout giant EQT (EQT SS: +26.04%) soared in its Stockholm debut with strong interest for a rare PE offering. PE-backed German software company TeamViewer (TMV GR: -8.34%) slipped on the biggest European tech IPO in 20 years. Hong Kong also saw its first major listing since July. The Fosun-backed biotech Henlius (2696 HK: -1.01), however, struggled on the low-end offer amid continued political unrest. Indoor bike maker Peloton (PTON US: -12.97%) also tumbled amid increasing unicorn skepticism and pressured Hollywood to shun from Wall Street as PE-backed talent agency Endeavor (EDR US) pulled its IPO just before launch. A number of biotech IPOs are set to launch in the U.S. this week, including the Swiss-based Spirogen spin-off ADC (ADCT US) and AstraZeneca spin-off Viela Bio (VIE US). The world’s largest beer brewer, AB InBev’s halved Asian Unit Budweiser Brewing (1876 HK) is also scheduled to IPO in H.K. at the low-end of its indicative range. Other IPO news of the week include: a) The CEO of WeWork was forced out under pressure, following the IPO fiasco, b) German logistic property group Garbe plans Frankfurt listing, c) contract chip maker GlobalFoundries in talks for an IPO, c) another tech unicorn, all remote company GitLab, eyes 2020 IPO, d) packaged goods company Post Holdings to spin off its active nutrition business BellRing Brands, and e) $5B BioNTech (BNTX US) expected to launch its IPO in 2 weeks.

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